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Practical Handbook VAT 2022

General rule

The taxable amount of the tax is the total amount of the consideration for the taxable transactions from the recipient or third parties.

Where the taxable person does not expressly and separately pass on the tax liability on the invoice, it is understood that the consideration did not include such liability, except in the following cases:

  1. Where the express levying of the tax is not compulsory.

  2. In the case of legally withheld payments in the event of termination of the transactions.

They are included in the concept of consideration:

  1. Any actual claim in favour of the person making the delivery or providing the service, arising from the principal performance or ancillary services, such as commission, freight and carriage charges, insurance or premiums for services rendered in advance.


    The lease of premises will include the amount of the rent, the amounts assimilated to the rent and any other amount that the lessor may demand from the lessee, such as community expenses, the amount of the Real Estate Tax, heating, water, electricity, building work, etc.

    Interest will not be included for the deferral of payment of the price when the following requirements are met:

    1. They relate to a period after the delivery of the goods or the provision of the services.

    2. That they are remuneration for financial operations of deferment or delay in the payment of the price, exempt from tax.

    3. That they are shown separately on the invoice issued by the taxable person.

    4. Not exceeding that usually applied in the market.


    In January a 100,000 euro flat is bought and received on 1 October.The payments to be made are:

    • April:30,000 and 1,000 euros interest.
    • October:40,000 and 2,000 euros interest.
    • December:30,000 and 3,000 euros interest.

    The taxable amount shall be:

    • April:31,000, includes interest as it is pre-accrual.

    • October:70,000 (40,000 to be paid in October plus the 30,000 to be paid in December), upon delivery VAT accrues on the outstanding payments, and interest accrued thereafter does not form part of the taxable base.

  2. The subsidies directly linked to the price of the operations, i.e. established on the basis of the number of units delivered or the volume of services rendered when they are determined before the operation is carried out.

    Both the DGT, in its consultation no. 0285-03, and the TJCE in its ruling of 22 November 2002, have qualified the second of the requirements set out in the previous paragraph, in the sense that "what must be established prior to the supply of the subsidised goods or services is not so much the amount of the subsidy as the mechanism for determining it, so that the entrepreneur or professional who carries out the operation is in a position to determine its amount, but without this necessarily being established in monetary units so far in advance".


    A passenger transport company receives two subsidies:2 euros for each passenger transported and another of 20,000 euros to cover the cost of the bus.The price of the trip is 10 euros plus VAT.

    The first subsidy is included in the tax base as it is directly linked to the ticket price.

    • Price of the trip:10
    • Subsidy associated with the trip:2
    • Total taxable base:12
    • VAT 10% x 12:1.20
    • Ticket price:10
    • VAT:1.20
    • Total to be paid by the user:11.20

    The second subsidy is not included in the tax base because it does not meet the requirement of being established on the basis of the volume of services rendered.

    The requirements that must be met for a subsidy to be considered directly linked to the price have been simplified on the basis of the criterion laid down by the Court of Justice of the European Union in its judgment of 27 March 2014 (Case C-151/13).This criterion is also recognised by the Central Economic Administrative Court, among others, in its resolution of 20 November 2014 (Resolution No. 01360/2011) and by the Directorate General for Taxation in consultations V4149-15 and V2263-16.

    In the aforementioned ruling, the CJEU specifies that the taxable amount of the tax will consist of everything received in consideration for the service provided, the only requirement being the existence of a direct link between the provision of the service and the consideration obtained.In this regard, it clarifies that, in order to recognise this link, it is not necessary that the direct beneficiary of the benefit be the recipient of the service or that the consideration be linked to individualised services.It will be necessary that the service is actually provided as consideration for the payment, without requiring that such consideration be received directly by the recipient of the service, but it may be a third party who pays for it.

    However, excludes from the consideration of subsidies linked to the price, and, therefore, monetary contributions made by the public administration to finance are not included in the tax base:

    1. The management of public services or the promotion of culture where there is no significant distortion of competition, whatever the form of management.These are financial contributions that public administrations make to the operator of certain services of public competition when there is no distortion of competition, generally because the activities are financed totally or partially by the administration and are not provided in free competition, such as, for example, municipal transport services or certain cultural activities financed with these contributions.

      These contributions shall not limit the right to deduction regulated in the last paragraph of Article 93.Five of the Law on VAT.

    2. Activities of general interest for the benefit of society as a whole, since there is no identifiable recipient and there are no users who pay any consideration.This would be the case for contributions made to finance research, development and innovation activities or public broadcasting services, under the conditions set out above, without prejudice to the consequences that may arise from this as regards the exercise of the right to deduct.

  3. The taxes and levies of any kind levied on the same taxed transactions, except VAT itself.

    Excise duties levied in relation to the goods that are the subject of the taxable transactions are included, with the exception of the Excise Duty on Certain Means of Transport.

  4. The withheld payments in accordance with the law by the person obliged to provide the service in cases of termination of transactions.

  5. The amount of the containers and packaging, including those that can be returned, charged to the recipients of the operation.

  6. The amount of the debts assumed by the recipient as total or partial consideration for the transactions.

    They are not included in the tax base:

    1. The indemnities, other than those referred to in the previous section, which do not constitute consideration or compensation for taxable transactions.

    2. The discounts and rebates granted before or at the same time as the transaction is carried out and on the basis of the transaction and which are justified by any legally admissible means of proof.

      This provision shall not apply where price reductions constitute remuneration for other transactions.

    3. The sums paid in the name and on behalf of the customer, by virtue of an express mandate from the customer.The taxable person is obliged to substantiate the actual amount of such expenditure and cannot deduct the tax that would have been levied on it.

      It is essential that the invoice appears in the name of the customer, the final recipient of the transaction.

      Conditions to be met in order to exclude supplies from the taxable amount:

      1. The sums must be paid in the name and on behalf of the customer.This will normally be evidenced by a corresponding invoice issued at the customer's expense.

      2. The payment of these sums must be made on the basis of an express mandate, oral or written, from the client on whose behalf he is acting, which excludes the possibility of considering expenses incurred by the trader or professional without knowing the name of his potential client as a supplementary payment.

      3. The amount received by the intermediary must exactly match the amount of the expense incurred by the client.

      4. The entrepreneur or professional intermediary may not deduct the tax that would have been levied on the expenses paid in the name and on behalf of his client.